Shares are up 25% since the chip maker announced Lip-Bu Tan as its chief executive.
This is technically, turnaround Tuesday. And yet, I struggled to find something that is truly turning around.
Despite excitement over Intel's new CEO, shares are still below the company's year-to-date highs — in February, when investors were expecting an imminent breakup.
Spotting a bargain in the stock market isn't as easy as it looks. There's a difference between "cheap looking" and cheap.
A potential joint venture between Intel and TSMC, and some of its clients, could help the chipmaker mitigate losses in its foundry business, which lost $13.4B in FY 2024. Intel's restructuring has heavily weighed on its profitability as well as the chipmaker's valuation. IFS is losing money hand over fist, and a strategic deal may be required in order to stop the bleeding for Intel and its shareholders.
Shares of Intel Corporation (NASDAQ:INTC) rose more than 8% in early-morning trading on Monday on news that incoming CEO Lip-Bu Tan has big plans to turn around the ailing chipmaker, including restructuring the company's approach to AI, resurrecting its manufacturing operations, and eyeing cuts to what Tan views as a “slow-moving and bloated middle-management layer,” according to a Reuters report.
Intel's hiring of Lip-Bu Tan, an outsider, can bring in a new perspective and initiate drastic cultural changes that the company, especially the Foundry, needs to compete in the open. Michelle Holthaus's promotion to CEO of Intel Products is a sound decision. Expecting one person to manage two distinct businesses and win against their respective strong competitors is impossible. The hiring of Lip-Bu Tan and the promotion of Michelle Holthaus further confirm my belief that the Intel spin-off is inevitable; it's just a matter of when.
Lip-Bu Tan's CEO role unites broad semiconductor ties with Intel Corporation's foundry ambition, aiming for Western advanced manufacturing leadership. Amid TSMC JV rumors, Intel's push to reclaim process dominance shifts away from divestment, leveraging Tan's track record in innovation. A moderate Buy for INTC stock targets $35 by FY26 (~23% annual return), contingent on cutting bureaucracy, reinvigorating culture, and executing strong foundry plans.
Intel's new CEO, Lip-Bu Tan, is driving a disciplined turnaround focused on accountability, execution, and restoring Intel's tech leadership. Intel is executing an ambitious plan to regain semiconductor manufacturing supremacy with breakthroughs like the 18A node, new CPUs, and expanding its foundry business. Intel has ample cash, significant cost-cutting measures, and massive subsidies from governments and private partners, greatly reducing execution risk.
Shares of Intel (INTC 8.36%) are surging on Monday. The company's stock had gained 6.8% at noon ET and was up as much as 8.7% earlier in the day.
Lip-Bu Tan, a former member of Intel's board and a vocal critic of former CEO Pat Gelsinger, will be taking the helm on Tuesday.
Lip-Bu Tan will purchase about $25 million in stock shortly after taking over as CEO, giving him immediate financial alignment with the moves he makes at Intel.